Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2]Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials$20Direct labor$12Variable manufacturing overhead$7Variable selling and administrative$3Fixed costs per year: Fixed manufacturing overhead$110,000Fixed selling and administrative expenses$50,000 During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company’s product is $46 per unit. Required:1. Compute the company’s break-even point in unit sales.2. Assume the company uses variable costing:a. Compute the unit product cost for Year 1, Year 2, and Year 3.b. Prepare an income statement for Year 1, Year 2, and Year 3.3. Assume the company uses absorption costing:a. Compute the unit product cost for Year 1, Year 2, and Year 3.b. Prepare an income statement for Year 1, Year 2, and Year 3.

Answers

Answer 1

Answer and  Explanation:

As per the data given in the question,

a)

For computation of contribution margin per unit first we need to find out the contribution margin per unit and fixed expenses which is shown below:-

Contribution margin per unit = Selling price per unit - Variable cost per unit

= $46 - ($20 + $12 + $7 + $3)

= $46 - $42

= $4

Fixed expenses = Fixed manufacturing overhead + Fixed selling and administrative expenses

= $110,000 + $50,000

= $160,000

Break-even units = Fixed expenses ÷ Contribution margin per unit

= $160,000 ÷ 4

= 40,000  units

2. a The Computation of unit product cost is shown below:-

Particulars              Year 1                    Year 2              Year 3

Unit product cost :

Direct material      $20                       $20                        $20

Direct labor         $12                          $12                          $12

Variable manufacturing

overhead             $7                          $7                               $7

Unit product cost $39                       $39                           $39

b. The preparation of Income statement is shown below:-

                                  Income statement

                                     Haas Company

Particulars Per unit           Year 1           Year 2             Year 3

Sales unit                           40,000         30,000            45,000

Sales           $46                $1,840,000   $1,380,000   $2,070,000

Less:

Variable cost :

Variable manufacturing

cost             $39              $1,560,000    $1,170,000     $1,755,000

Variable selling and

administrative cost $3    $120,000       $90,000       $135,000

Total variable cost $42   $1,680,000    $1,260,000   $1,890,000

Contribution margin $4   $160,000       $120,000     $180,000

Fixed expenses :

Fixed Manufacturing

overhead                          $110,000           $110,000          $110,000

Fixed selling and

administrative expense   $50,000             $50,000          $50,000

Net Operating Income    $0                       -$40,000          $20,000

3. a. The computation of unit product cost for Year 1, Year 2, and Year 3 is shown below:-

Particulars                   Year 1                     Year 2             Year 3

Produced units          40,000                    55,000            20,000

Unit Product Cost:

Direct material            $20                        $20                    $20

Direct labor                $12                          $12                     $12

Variable manufacturing

overhead                    $7                          $7                            $7

Fixed manufacturing

overhead                    $2.75                    $2                             $5.5

($110,000 ÷ Number of unit produced)

Total cost of produced unit $41.75 $41                             $44.5

3. b The Preparation of income statement for Year 1, Year 2, and Year 3 is attached in the spreadsheet.

Problem 7-18 Variable And Absorption Costing Unit Product Costs And Income Statements [LO7-1, LO7-2]Haas

Related Questions

Schwiesow Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.05 Direct labor $ 3.50 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 11,000 Sales commissions $ 1.00 Variable administrative expense $ 0.40 Fixed selling and administrative expense $ 5,500 If the selling price is $18.70 per unit, the contribution margin per unit sold is closest to:

Answers

Answer:

The contribution margin per unit is $5.1

Explanation:

The contribution margin per unit is the amount from selling price per unit after deducting all the related variable costs per unit. This is the amount that each product contributes towards covering the fixed costs.

Contribution margin per unit:

Selling price per unit                              18.7

Less : Variable cost per unit

Direct material                                       (7.05)

Direct labor                                             (3.5)

Variable manufacturing Overhead       (1.65)

Sales commission                                  (1.00)

Variable Admin expense                      (0.40)

Contribution margin per unit                  5.1

Fixed expenses are $384,000 per month. The company is currently selling 6,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $9 per unit. In exchange, the sales staff would accept a decrease in their salaries of $46,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

Answers

Answer:

A reduction of $12,500 in net operating income

Explanation:

The net operating income/loss is the difference between the sales and the total costs.

The change in the company's net operating income is the net of the increased commission and the total decrease in salaries. The commission is a variable cost that is dependent on the total number of units sold.

Hence the overall effect on the company's monthly net operating income of this change

= $46,000 - ($9 * 6500)

= ($12,500)

Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $104,000 and budgeted cash disbursements total $87,000. The desired ending cash balance is $70,000. The company can borrow up to $90,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

Answers

Answer:

                                                     Zolezzi Inc.

                                          Cash budget for March

                                                       Amount in $'000                          

Opening balance                                27

Add;

Cash receipts                                    104      

Less;

Cash disbursements                        (87)                

Ending balance                                  44  

Amount to be borrowed                   26  

Desired ending balance                   70                                                                                                

Explanation:

The cash budget a forecast of the expected movement in cash balance. This is as a result of expected cash receipts and disbursements and may be expressed mathematically as

opening cash balance + cash receipts - Cash disbursed = closing cash balance

27 + 104 - 87 = ending balance

Ending balance = 44

Desired ending balance = 70

Amount to be borrowed = 70 - 44

= 26

On January 1, 2017, Shamrock Inc. issued $400,000 of 7%, 5-year bonds at par. Interest is payable semiannually on July 1 and January 1. Prepare journal entries to record the following. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) (a) The issuance of the bonds. (b) The payment of interest on July 1. (c) The accrual of interest on December 31.

Answers

Answer and Explanation:

The journal entries are shown below:

On Jan 1

Cash $400,000

           To Bonds payable  $400,000

(Being the bond is issued for cash)

For recording this we debited the cash as it increased the assets and at the same time it increased the liabilities so the bond payable is credited

On July 1

Interest expense  $14,000

             To Cash  $14,000

(Being the payment of interest is recorded)

The computation is shown below:

= $400,000 × 7% × 6 months ÷ 12 months

= $14,000

For recording this we debited the expenses as it increased the expenses and at the same time it decreased the assets so the cash is credited

On Dec 31

Interest expense $14,000

           To Interest payable $14,000

(Being the accrual of interest is recorded)

For recording this we debited the expenses as it increased the expenses and at the same time it increased the liabilities so the interest payable is credited

The following materials standards have been established for a particular product: Standard quantity per unit of output 5.3 pounds Standard price $ 14.10 per pound The following data pertain to operations concerning the product for the last month: Actual materials purchased 6,150 pounds Actual cost of materials purchased $ 63,780 Actual materials used in production 5,650 pounds Actual output 790 units The direct materials purchases variance is computed when the materials are purchased. What is the materials quantity variance for the month?The following materials standards have been established for a particular product: Standard quantity per unit of output 5.3 pounds Standard price $ 14.10 per pound The following data pertain to operations concerning the product for the last month: Actual materials purchased 6,150 pounds Actual cost of materials purchased $ 63,780 Actual materials used in production 5,650 pounds Actual output 790 units The direct materials purchases variance is computed when the materials are purchased. What is the materials quantity variance for the month?

Answers

Answer:

Direct material quantity variance= $20,628.3

Explanation:

Giving the following information:

Standard quantity per unit of output 5.3 pounds

Standard price $14.10 per pound

Actual materials used in production 5,650 pounds

Actual output 790 units

To calculate the direct material quantity variance, we need to use the following formula.

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (5.3*790 - 5,650)*14.1

Direct material quantity variance= $20,628.3

Financial Crisis

Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time. Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts:

a. short-run aggregate supply right.

b. aggregate demand right.

c. aggregate demand left.

d. short-run aggregate supply left.

Answers

Answer:

The correct answer to the given question is “D – Short-Run Aggregate Supply Left”

Explanation:

While the problem is there for offering and deriving, less asset is being completed on the budget. Thus due to the lack of capital. The investment standard growing will decrease and therefore as an outcome, short run cumulative source curve will move to the left.

Paolucci Corporation's relevant range of activity is 8,400 units to 17,000 units. When it produces and sells 12,700 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.10 Direct labor $ 4.00 Variable manufacturing overhead $ 2.00 Fixed manufacturing overhead $ 3.60 Fixed selling expense $ 1.30 Fixed administrative expense $ 0.60 Sales commissions $ 1.25 Variable administrative expense $ 0.50 If 11,700 units are sold, the variable cost per unit sold is closest to:

Answers

Answer:

The variable cost per unit sold is closest to $14.85

Explanation:

In order to calculate the variable cost per unit sold we would have to use the following formula:

Total variable cost per unit=(Direct materials+Direct labor+Variable manufacturing overheads+Sales commissions+Variable adminsitrative expenses)

Therefore,Total variable cost per unit=$7.10+$4.00+$2.00+$1.25+$0.50

Total variable cost per unit=$14.85

The variable cost per unit sold is closest to $14.85

Offenbach & Son has just made its sales forecasts and its marketing department estimates that the company will sell 232,200 units during the coming year. In the past, management has maintained inventories of finished goods at approximately one month’s sales. The inventory at the start of the budget period is 15,600 units. Sales occur evenly throughout the year. Required: Estimate the production level required for the coming year to meet these objectives.

Answers

Answer:

Production= 235,950 units

Explanation:

Giving the following information:

Sales= 232,200 units during the coming year.

Desired ending inventory= one month's sales

Beginning inventory= 15,600 units.

First, we need to calculate the desired ending inventory:

Desired ending inventory= 232,200/12= 19,350

Now, we can determine the production for the year:

Production= sales + desired ending inventory - beginning inventory

Production= 232,200 + 19,350 - 15,600

Production= 235,950 units

Oldham Corporation bases its predetermined overhead rate on a variable manufacturing overhead cost of $4.00 per machine-hour and fixed manufacturing overhead cost of $87,822 per period. If the denominator level of activity is 4,100 machine-hours, what would be the fixed component in the predetermined overhead rate

Answers

Answer:

$21.42

Explanation:

The computation of fixed component in the predetermined overhead rate is shown below:-

Fixed component in the predetermined overhead rate = Fixed Overhead ÷ Machine Hours

= $87,822 ÷ 4,100

= $21.42

Therefore for computing the fixed component in the predetermined overhead rate we simply divide the fixed overhead by machine hours.

And all the other information i.e given is not relevant. Hence, ignored it

Morrish Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in January. The variable overhead rate is $1.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $102,950 per month, which includes depreciation of $19,880. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answers

Answer:

$95,850

Explanation:

To calculate cash disbursements for manufacturing overhead:

Direct labor cost + Fixed manufacturing overhead

where,

direct labor cost = Direct labor hours × per labor rate

= $7,100 x $1.8 =

$12,780

Budgeted fixed manufacturing overhead - depreciation

102,950 - 19880 =

Direct labor cost + Fixed manufacturing overhead =

$83,070 + $12,780

= $95,850

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $95,850

Answer:

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $95,850

Explanation:

In order to calculate the the January cash disbursements for manufacturing overhead on the manufacturing overhead budget we would have to use the following formula:

Total cash disbursement for overhead in January =Variable overhead+Cash portion of fixed manufacturing overhead

Variable overhead = 7,100 direct labor-hours × $1.80 = $12,780

Cash portion of fixed manufacturing overhead = $102,950 - $19,880 = $83,070

Therefore, Total cash disbursement for overhead in January = $12,780 + $83,070

Total cash disbursement for overhead in January =$95,850

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $95,850

Rembrandt Paint Company had the following income statement items for the year ended December 31, 2021 ($ in thousands): Sales revenue $ 24,000 Cost of goods sold $ 13,500 Interest revenue 220 Selling and administrative expense 3,100 Interest expense 420 Restructuring costs 1,400 In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $2.2 million and a gain on disposal of the component’s assets of $3.2 million. 600,000 shares of common stock were outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25% on all items of income (loss). Required: Prepare a multiple-step income statement for 2021, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.)

Answers

Answer:

          Rembrandt Paint CompanyIncome Statement - December 31, 2021

Sales revenues                                                        $24,000,000

- Cost of goods sold                                               ($13,500,000)

Gross margin                                                           $10,500,000

Operating expenses:

- Selling and adm. expenses             ($420,000)

- Restructuring costs                        ($1,400,000)

Total operating expenses                                        ($1,820,000)

Income from operations                                          $8,620,000

Other revenue and expenses:

Gain on sales of assets                   $3,200,000  

Interest revenue                                 $220,000

Loss from discontinued oper.       ($2,200,000)

Interest expense                               ($420,000)

Total other revenue and expenses                             $800,000

Net income pre-tax                                                   $9,420,000

Income taxes (25%)                                                  ($2,355,000)

Net income after taxes                                             $7,065,000

Shares outstanding                                                        600,000

Earnings per share (EPS)                                                    $11.78

   

In this assignment, you will develop a more personalized understanding of the Balanced Scorecard concept and see how your vision and mission can be linked to your goals and objectives. Using the S-M-A-R-T tools in section 6.7 of Chapter 6 in the text, create your own list of goals and objectives.

Create 4 to 5 S-M-A-R-T goals and objectives and demonstrate how they link to your Strategy Diamond and personal vision and mission statements.​

Answers

Explanation:

The following are my SMART goals:-

Specific

1. I want to be physically fit within 6 months on order to be able to run a marathon in less than 3 hours.

2. I want to become a manager in my current organization from my current position as an assistant manager within the next 3 years in order to be able lead a team.

3. I want to be a lovable dad to my daughter in the next 3 months so that I can spend more quality time with her.

4. I want to become an amazing husband to my wife by spending more quality time with her and also taking her on vacations in the next 6 months.

Measurable

1. I would start my training from next week. Initially I would run 3 to 5 kilometers with walk breaks.

2. I would talk to my boss next week to ask for more responsibilities and also to ask him to let me know what is required to get promoted.

3. I would start leaving office early by being more efficient and effective in the office. I will also take my daughter on walks and play with her for 1 hour daily.

4. I would come back from office early and spend time with my wife.

Attainable

1. I will talk to other marathoners to know whether my goal is attainable and will also research about it.

2. I will talk to my colleagues whom are managers about what they did to get promoted.

3. I will talk to other dads to know whether my goal is attainable.

4. I will talk to other husbands that are successful.

Realistic

When I start measuring my progress weekly and getting a feedback from people whom I admire, then I would know how realistic my goals are.

Timely

I have given a time frame for the attainment of all these goals which is very vital.

For implementing these goals, I m going to use the Plan-Do-Act-Dare cycle.

Since my objective is to become a well rounded person in my personal and also my professional life, the above steps will surely help me in becoming that person.

The strategy diamond will consist of:-

1. Arenas- Professional and Personal

2. Vehicles- Focus and hard work

3. Differentiation- Being different and unique from others.

4. Staging- Speed of initiatives

Also, there should be an economic logic binding this.

Garison Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. Garison uses two sales promotion techniques— warranties and premiums— to attract customers.
Below is the information to answer the required question.
a. Musical instruments and sound equipment are sold with a one- year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is 2% of sales.
b. The premium is offered on the recorded and sheet music. Customers receive a coupon for each dollar spent on recorded music or sheet music. Customers may exchange 200 coupons and $ 20 for a CD player. Garison pays $ 32 for each CD player and estimates that 60% of the coupons given to customers will be redeemed.
c. Garison’s total sales for 2010 were $ 7,200,000—$ 5,700,000 from musical instruments and sound reproduction equipment and $ 1,500,000 from recorded music and sheet music.
d. Replacement parts and labor for warranty work totaled $ 164,000 during 2010.
e. A total of 6,500 CD players used in the premium program were purchased during the year and there were 1,200,000 coupons redeemed in 2010.
f. The accrual method is used by Garison to account for the warranty and premium costs for financial reporting purposes.
The balances in the accounts related to warranties and premiums on January 1, 2010, were as shown below.
Inventory of Premium CD Players $ 37,600
Estimated Premium Claims Outstanding 44,800
Estimated Liability from Warranties 136,000
Question:
(a) Garison Music Emporium is preparing its financial statements for the year ended December 31, 2010. Determine the amounts that will be shown on the 2010 financial statements for the following.
(1) Warranty Expense -
(2) Estimated Liability from Warranties -
(3) Premium Expense -
(4) Inventory of Premium CD Players -
(5) Estimated Premium Claims Outstanding -

Answers

Answer:

Explanation:

(a)

Given:

Warranty exp = 2% of musical instrument & sound equipment

Calculation:

Warranty exp = Warranty exp * 5,424,000

Warranty exp = 2% * 5,424,000

Warranty exp = 108,480

(b)

Warranty liability as on December 2017 = Opening Balance + Warranty Expense - Warranty Claim

Warranty liability as on December 2017 = 138,000 + 108,480 - 156,400

Warranty liability as on December 2017 = $90,080

(c)

The customer receives one coupon for each dollar spend 2,138,000 only 50% coupon will be redeemed.

Exp provision liability created = 50% * 2,138,000

Exp provision liability created = 1,069,000

Customer can exchange 200 coupon & $30 for MP3 player which is purchase for 42 that mean 200 coupon will be for 12 i.e. (42-30) value of coupon will be

12

200

= 0.06.

Value of 1,069,000 coupon = 1,069,000 * 0.06

Value of 1,069,000 coupon = 64,140

(d)

1,138,000 coupons had been redeemed during the year each MP3 player required 200 coupons.

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Cost = 5,690 * 42

Cost = 238,980

Inventory Premium = Opening Balance + Purchases - Utilized Redeemed Coupon

Inventory Premium = 39,210 + (7,010 * 42) - 238,980

Inventory Premium = 39,210 + 294,420 - 238,980

Inventory Premium = $94,650

(e)

Premium liability balance = Opening Balance + Premium Exp Provision - Coupon Redeemed

Premium liability balance = 41,670 + 64,140 - (1,138,000 * 0.06)

Premium liability balance = 41,670 + 64,140 - 68,280

Premium liability balance = 37,530

Indigo Incorporated factored $135,100 of accounts receivable with Sweet Factors Inc. on a without-recourse basis. Sweet assesses a 3% finance charge of the amount of accounts receivable and retains an amount equal to 7% of accounts receivable for possible adjustments. Prepare the journal entry for Indigo Incorporated and Sweet Factors to record the factoring of the accounts receivable to Sweet.

Answers

Answer:

Indigo Incorporated Journal entrie

Dr Cash 121,590

Dr Due from Factor 9,457

Dr Loss on Sale of Receivable 4,053

Cr Accounts Receivable 135,100

Sweet Factors Inc

Dr Account Receivable 135,100

Cr Due to Customer 9,457

Cr Finance Revenue 4,053

Cr Cash 121,590

Explanation:

Indigo Incorporated Journal entries

Dr Cash 121,590

Dr Due from Factor 9,457

Dr Loss on Sale of Receivable 4,053

Cr Accounts Receivable 135,100

Sweet Factors Inc

Dr Account Receivable 135,100

Cr Due to Customer 9,457

Cr Finance Revenue 4,053

Cr Cash 121,590

Due from Factor = 7% x $135,100 = $9,457

Loss on Sale of Receivables = 3% x $135,100= $4,053

According to the Air Transport Association of America, the average operating cost of an MD-80 jet airliner is $2,087 per hour. Suppose the operating costs of an MD-80 jet airliner are normally distributed with a standard deviation of $174 per hour. (Round the value of z to 2 decimal places. Round your answers to 2 decimal places.) (a) At what operating cost would only 23% of the operating costs be less? $Entry field with correct answer 1958.44 (b) At what operating cost would 65% of the operating costs be more? $Entry field with correct answer 2019.95 (c) What operating cost would be more than 85% of operating costs ?

Answers

Answer:

(a)$1955

(b)$2017.19

(c)$2273.16

Explanation:

Check attachment

The Donut Stop acquired equipment for $10,000. The company uses straight-line depreciation and estimates a residual value of $2,000 and a four-year service life. At the end of the second year, the company estimates that the equipment will be useful for four additional years, for a total service life of six years rather than the original four. At the same time, the company also changed the estimated residual value to $1,000 from the original estimate of $2,000. Calculate how much The Donut Stop should record each year for depreciation in years 3 to 6.

Answers

Answer:

Cost of Equipment: $10,000

Less Accumulated Depreciation ($10,000 - $2,000 / 4*2):   $4,000

= Book Value (End of Year 2):     $6,000

Less New Residual Value:       $-1,000

= New Depreciated Cost: $5,000

Remaining Service Life:  4

Annual Depreciation in Years 3 to 6 ($5,000 / 4):  $1,250

An individual is planning to set-up an education fund for his grandchildren. He plans to invest $17,500 annually at the end of each year. He expects to withdraw money from the fund at the end of 10 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 10 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answers

Answer:

Pv=$8105.86

Fv=$37,781.18

Pva=$691,014.62

Fva=$117426.42

Explanation:

Kindly check the attached picture for detailed explanation

Teall Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 9,000 MHs Actual level of activity 9,100 MHs Standard variable manufacturing overhead rate $ 6.20 per MH Budgeted fixed manufacturing overhead cost $ 55,000 Actual total variable manufacturing overhead $ 56,600 Actual total fixed manufacturing overhead $ 59,500 What was the fixed manufacturing overhead budget variance for the month?

Answers

Answer:

$4,500 U

Explanation:

Teall Corporation

Budget variance = Actual fixed overhead cost − Budgeted fixed overhead cost

Actual total fixed manufacturing overhead $ 59,500

Less Budgeted fixed manufacturing overhead cost $ 55,000

Fixed manufacturing overhead budget variance for the month $4,500 U

Therefore the fixed manufacturing overhead budget variance for the month is $4,500 U

Suire Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales $ 600,000 Variable expenses $ 241,000 Fixed manufacturing expenses $ 232,000 Fixed selling and administrative expenses $ 180,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $192,500 of the fixed manufacturing expenses and $107,500 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product D14E

Answers

Answer:

$127,000

Explanation:

Suire Corporation Net operating income

Sales $ 600,000

Variable Costs $ 241,000

Contribution Margin $ 359,000

Fixed Expenses $232,000

Net Operating Income $127,000

When China reformed state-owned enterprises, it tried a new approach to choosing managers: it put managerial jobs up for auction. The bids for the jobs consisted of promises of future profit streams that the managers would generate and then deliver to the state. In cases where the incumbent manager was the winning bidder, firm productivity tended to increase dramatically. When outside bidders won, there was little productivity improvement. If incumbent managers were not generally more qualified, how can you explain this result?

Answers

Answer: The explanation is provided below

Explanation:

An outsider tend to overbid with a eye to get the job while, an insider manager bids a realistic performance that is achievable. An insider manager understands the factors which affect the organization's performance and then tries to take control of the factors.

People make or break organizations and there is a greater chance of the insider getting the support and cooperation of the employees in comparision to outside bidders. Also, an insider manager has a prospective that is long term with regard to his or her association with the enterprise while an outsider may come and then realize that he doesn't like the organization and then leave for a better enterprise.

Therefore internal managers are a better prospect of being given the responsibility to manage the enterprise.

Answer:

Explanation:

A stranger tends to bid excessively  to get the job. In contrast, the internal manager offers realistic, achievable performance. The internal manager understands the factors that influence the organization's performance and tries to take control of it. There is a greater chance that an insider will get employee support and cooperation than strangers . Insider manager has been in the organisation for and already know the rules that guide the company, The Dos ans Donts.. A stranger have lilttle or no knowledge about how the company is run and  can choose to stay or  he will go to a better company. Therefore, internal managers are in good position for   taking responsibility for running the welfare and activites of a company.

Windsor Co. is building a new hockey arena at a cost of $2,420,000. It received a down payment of $510,000 from local businesses to support the project, and now needs to borrow $1,910,000 to complete the project. It therefore decided to issue $1,910,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%.

Prepare the journal entry to record the issuance of the bonds on January 1, 2019.

Answers

Answer:

Dr    Cash   $2,032,577.26

Cr premium on bonds payable  $122,577.26  

Cr bonds payable                        $1,910,000

Explanation:

First and foremost the proceeds received from the bond issuance needs to determine the pv formula in excel as follows:

=-pv(rate,nper,pmt,fv)

rate is the yield  to maturity of 9%

nper is the number of annual coupons payable by the bond which is 10

pmt is the amount of annual coupon i.e  $1,910,000*10%=$191000

fv is the face value of the bond which is  $1,910,000

=-pv(9%,10,191000,1910000)=$2,032,577.26  

premium on bonds issuance= 2,032,577.26-1,910,000.00= $122,577.26  

The Baldwin Company currently has the following balances on their balance sheet: Total Assets $255,213 Total Liabilities $151,328 Retained Earnings $47,588 Suppose next year the Baldwin Company generates $44,200 in net profit, pays $12,000 in dividends, total assets increase by $55,000, and total liabilities remain unchanged. What will ending Baldwins balance in Common Stock be next year? Select: 1 $79,097 $509,129 $381,753 $143,497

Answers

Answer:

$79,097

Explanation:

The accounting equation shows the relationship between the elements of a balance sheet which are assets liabilities and equity. This may be expressed mathematically as

Assets = Liabilities + Equity

While assets include fixed assets, cash, inventories, account receivables etc, liabilities include accounts payable, loans payable, accrued expenses etc.

Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.

Hence in current year,

Total equity = $255,213 - $151,328

= $103,885

If retained earnings is $47,588 then common stock

= $103,885  - $47,588

= $56,297

Change to equity next year

= $55,000

Change to retained earnings

= $44,200 - $12,000

= $32,200

Hence change in common stock

= $55,000 - $32,200

= $22,800

Common stock balance

= $56,297  + $22,800

= $79,097

What accounting assumption, principle, or constraint would Target Corporation use in each of the situations below? (a) Target was involved in litigation over the last year. This litigation is disclosed in the financial statements. select an option (b) Target allocates the cost of its depreciable assets over the life it expects to receive revenue from these assets. select an option (c) Target records the purchase of a new Dell PC at its cash equivalent price. select an option

Answers

Answer:

a. ASC 450 (previously recognized as SFAS 5) includes the declaration of a risk in proceedings and there is at minimum a "fair probability" that a loss has been sustained, and the report must provide an estimation of the probable damage or extent of damage or a declaration that this very calculation is not practicable.

b. Three specific criteria dictate however much depreciation they can subtract: (1) the real estate value, (2) the property rehabilitation time and (3) the form of depreciation utilized. You can't actually subtract as an benefit the lease or interest contributions, or the cost of furniture, decorations and appliances. The depreciation will only be deducted on the specific property used during leasing purposes.

c. For overclockers as well as operation in the federation the Computer is still the obvious winner. If you want to change hardware to maintain the cutting edge of your program, then a Laptop is the way forward. Further software must be installed for the PC like a large and ever-growing free software computer collection. Even so, thanks to an embedded tool named "Boot camp," you can install a Windows ® operating system on a Mac along with PC applications

 

On January 1, 2020, Martinez Company makes the two following acquisitions. 1. Purchases land having a fair value of $330,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $483,153. 2. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $380,000 (interest payable annually). The company has to pay 10% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Martinez Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.

Answers

Answer:

Explanation:

a)

Date Account Titles and Explanation Debit Credit

January 1, 2020 Land $360,000.00

Discount on notes payable $246,621.00

Notes payable $ 606,621.00

(To record purchase of land by issuing note payable)

PV of $606,621 discounted at 11% =606,621/(1.11)^5 = $ 360,000

2.

Computation of the discount on notes payable:

Maturity value $560,000

Present value of $560,000 due in 8 years at 11% = $560,000 * 0.43393 = $ 243,000

Present value of $39,200 payable annually for 8 years at 11% annually—$39,200 * 5.14612 = $ 201,728

Present value of the note = $ 243,000 + $ 201,728 = $ 444,728

Discount = $ 560,000 - $ 444,728 = $ 115,272

Date Account Titles and Explanation Debit Credit

January 1, 2020 Equipment $444,728.00

Discount on notes payable $115,272.00

Notes payable $ 560,000.00

(To record purchase of equipment by issuing note payable)

b)

1.

Date Account Titles and Explanation Debit Credit

December 31, 2020 Interest expense ($ 360,000*11%) $39,600

Discount on notes payable $39,600

(To record the interest expense recorded and discount amortized)

2.

Date Account Titles and Explanation Debit Credit

December 31, 2020 Interest expense ($444,728 * 11%) $48,920

Discount on notes payable $9,720

Interest Payable ( $ 560,000 * 7%) $39,200

(To record the interest expense recorded)

Depreciation by Two Methods A storage tank acquired at the beginning of the fiscal year at a cost of $80,000 has an estimated residual value of $4,000 and an estimated useful life of 20 years. a. Determine the amount of annual depreciation by the straight-line method. $ b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar.

Answers

Answer:

a. Annual depreciation = $3,800

b. First year depreciation is $8,000' while second year depreciation is $7,200.

Explanation:

a. Determine the amount of annual depreciation by the straight-line method.

Depreciable amount = $80,000 - $4,000 = $76,000

Annual depreciation = $76,000 / 20 = $3,800

b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar.

Straight line depreciation rate = 1 / 20 = 0.05, or 5%

Double declining depreciation rate = 5% * 2 = 10%

First year depreciation = $80,000 * 10% = $8,000

Second year depreciation = ($80,000 - $8,000) * 10% = $7,200

On December 31,2018,Infinity Inc.records an adjusting entry to accrue interest on a note.On January 31,2019,Infinity receives a check for $4,680,which represents two months of accumulated interest on the note.Upon receipt of this interest payment,Infinity should debit: A)Interest Receivable for $2,340,debit Cash $2,340,and credit Interest Revenue for $4,680. B)Cash for $4,680,credit Interest Receivable for $2,340,and credit Interest Revenue for $2,340. C)Cash for $4,680 and credit Interest Receivable for $4,680. D)Cash for $4,680 and credit Interest Revenue for $4,680.

Answers

Answer:

D)Cash for $4,680 and credit Interest Revenue for $4,680.

Explanation:

The Journal entry with their narrations and explanation is here shown below:-

Cash Dr, $4,680

   To Interest revenue $4,680

(Being receipt of interest payment is recorded)

Therefore for recording this entry here we debited the cash as it is received and we credited the interest revenue as it is decreasing.

COST VOLUME PROFIT ANALYSIS Comfort Homeless Inc, a factory that produces beds for homeless shelters, is considering extending its production and introducing a new bed with ungraded features this upcoming spring season. The selling price for the each of the beds is $48. Currently, to produce the beds, Comfort Homeless Inc states it cost $22. The variable cost total $6, whereas month fixed costs are $16,000. Instructions: a. Calculate the breakeven point in units .(20 points) b. Comfort Homeless Inc. increases its selling price from $48 a bed to $49.95 a bed. Calculate the new breakeven points in units. (20 points) c. Find the new breakeven point in units if the cost to produce the beds will decrease to $19 each because a new supplier was found when purchasing the raw materials. (20 points) d. Comfort Homeless Inc. is considering selling mattresses. It only expects to sell one mattress for every bed it sells. Comfort Homeless Inc. can purchase the mattresses for $5 each and sell them for $9 each. Total fixed cost should remain the same at $16,000 per month. Calculate the breakeven point in units for beds and mattresses. (40 points)

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Selling price per unit= $48

Unitary variable cost= $6

Total fixed costs= $16,000

A)

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 16,000/ (48 - 6)

Break-even point in units= 381 units

B) Selling price= $49.95 a bedpoints

Break-even point in units= 16,000/ (49.95 - 6)

Break-even point in units= 364 units

C) Unitary variable cost= 6 - 3= 3

Break-even point in units= 16,000 / (48 - 3)

Break-even point in units= 356 units

D) Matresses= 1

Beds= 1

Proportions of sales:

Matreses= 0.5

Beds= 0.5

Selling price per matress= $9

Unitary variable cost= $5

Break-even point (units)= Total fixed costs / Weighted average contribution margin ratio

Weighted average contribution margin ratio= (weighted average selling price - weighted average unitary variable cost)

Weighted average contribution margin ratio= (0.5*9 + 0.5*48) - (0.5*5 + 0.5*6)

Weighted average contribution margin ratio= $23

Break-even point (units)= 16,000/23

Break-even point (units)= 696 units

For the cost and price functions below, find



a. the number, q, of units that produces maximum profit



b. the price, p, per unit that produces maximum profit



c. the maximum profit, P.



C(q) = 70 + 17q



p = 77 - 2q

Answers

Answer:

a) The number, q, of units that produces maximum profit = 15

b) The price, p, per unit that produces maximum profit = 47 (currency not giben in the question)

c) Maximum Profit = P = 380 (currency not given in the question).

Explanation:

The cost function and price per unit function are given respectively as

C(q) = 70 + 17q

p = 77 - 2q

where q = quantity or number of units

a.) the number, q, of units that produces maximum profit

Total cost = C(q) = 70 + 17q

Revenue = (price per unit) × (Number of units) = p × q = (77 - 2q) × q = (77q - 2q²)

Profits = P(q) = (Revenue) - (Total Cost)

P(q) = (77q - 2q²) - (70 + 17q)

P(q) = -2q² + 60q - 70

To maximize the profits, we just obtain the point where the profit function reaches a Maximum.

At the maximum of a function, (dP/dq) = 0 and (d²P/dq²) < 0

Profit = P(q) = -2q² + 60q - 70

(dP/dq) = -4q + 60

At maximum point,

(dP/dq) = -4q + 60 = 0

q = (60/4) = 15

(d²P/dQ²) = -4 < 0 (hence, showing that the this point corresponds to a maximum point truly)

Hence, the number, q, of units that produces maximum profit = 15.

b.) the price, p, per unit that produces maximum profit

The price per unit is given as

p = 77 - 2q

Maximum profit occurs at q = 15

p = 77 - (2×15) = 47

Hence, the price, p, per unit that produces maximum profit = 47 (currency not given in the question)

c.) the maximum profit, P.

The Profit function is given as

Profit = P(q) = -2q² + 60q - 70

At maximum Profit, q = 15

Maximum Profit = P(15)

= -2(15²) + 60(15) - 70

= 380 (currency not given in the question).

Hope this Helps!!!

A) The number, q, of units that produce maximum profit is = 15

B) The price, p, per unit that creates maximum profit is = 47

C) Maximum Profit is = P = 380

What is the cost and price function?

When The cost procedure and price per unit procedure are presented respectively as:

C(q) is = 70 + 17q

p is = 77 - 2q

where that q is = quantity or number of units

a.) When the number, q, of units that produce maximum profit

The Total cost is = C(q) = 70 + 17q

When the Revenue is = (price per unit) × (Number of units) that is = p × q = (77 - 2q) × q is = (77q - 2q²)

After that Profits is = P(q) = (Revenue) - (Total Cost)

Then P(q) is = (77q - 2q²) - (70 + 17q)

Now, P(q) is = -2q² + 60q - 70

When To maximize the profits, Then we just obtain the point where the profit function reaches a Maximum.

When At the maximum of a function, (dP/dq) is = 0 and (d²P/dq²) < 0

Profit is = P(q) = -2q² + 60q - 70

(dP/dq) is = -4q + 60

Then At maximum point are:

(dP/dq) is = -4q + 60 = 0

After that, q = (60/4) = 15

Then (d²P/dQ²) = -4 < 0 (hence, showing that this point corresponds to a maximum point truly)

Therefore, the number, q, of units that produce maximum profit is = 15.

b.) When the price, p, per unit that produces maximum profit

The price per unit is given as

p is = 77 - 2q

Then Maximum profit occurs at q is = 15

p is = 77 - (2×15) = 47

Therefore, the price, p, per unit that produces maximum profit is = 47 (currency not provided in the question)

c.) When the maximum profit, P.

The Profit function is given as

Profit is = P(q) = -2q² + 60q - 70

Then At maximum Profit, q = 15

So, The Maximum Profit is = P(15)

Then = -2(15²) + 60(15) - 70

Therefore, = 380 (currency not given in the question).

Find more information Cost and price function here:

https://brainly.com/question/17185609

Sheffield Corp. issued $7080000 of 11%, ten-year convertible bonds on July 1, 2020 at 96.1 plus accrued interest. The bonds were dated April 1, 2020 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1416000 of these bonds were converted into 600 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. If "interest payable" were credited when the bonds were issued, what should be the amount of the debit to "interest expense" on October 1, 2020

Answers

Answer:

The amount of the debit to "interest expense" on October 1, 2020 is $194,700

Explanation:

According to the given data we have the following:

Bond face value=$7,080,000

interest rate=11%

There are 3 months interest recognized from july to september, therefore, to calculate the amount of the debit to "interest expense" on October 1, 2020 we would have to make the following calculation:

amount of the debit to "interest expense" on October 1, 2020=$7,080,000*11%*3 months / 12 months

amount of the debit to "interest expense" on October 1, 2020=$194,700

The amount of the debit to "interest expense" on October 1, 2020 is $194,700

Consider a portfolio manager with a $20,500,000 equity portfolio under management. The manager wishes to hedge against a decline in share values using stock index futures. Currently a stock index future is priced at 1250 and has a multiplier of 250. The portfolio beta is 1.25. Calculate the number of contracts required to hedge the risk exposure and indicate whether the manager should be short or long.

Answers

Answer:

Assume that a month later the equity portfolio has a market value of $20,000,000 and the stock index future is priced at 1150 with a multiplier of 250. Calculate the profit on the equity position.

Calculate the overall profit.

$1,550,000

Explanation:

Assume that a month later the equity portfolio has a market value of $20,000,000 and the stock index future is priced at 1150 with a multiplier of 250. Calculate the profit on the equity position.

Calculate the overall profit.

The manager should be short on the stock index futures because the position on the equity portfolio is long.

Number of contracts required to hedge

= [$20,500,000/(1250*250)] * 1.25 = 82 contracts

Profit on the equity portfolio

= $20,000,000 - $20,500,000 = -$500,000

Profit on the stock index future

= [(1250)(250) – (1150)(250)] x 82 = $2,050,000

Overall profit

=  $2,050,000 - $500,000

= $1,550,000

therefore, the overall profit is  $1,550,000

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